Four Bad Bear Markets – Understanding long term bear markets is critical and the following two charts will give you a relative idea what a bear market looks like. The G 20 – rhetoric and results. Israel – right wing takes control and spurns Obama/Clinton peace process. Stimulus & Budget. Employment #’s. Why the current rally may continue – “Rotation” and volume.
Click on either chart to see bigger chart. Charts from dshort.com
Four Bad Bears
These charts graphically put in perspective where we are relative to 3 other major bear markets starting with the Dow from 1929 to 1932 The first chart is over 34 months and the second is over 10 years. The second includes the often never mentioned 9 year long NASDQ bear market.
You can draw you own conclusions, but notice how far we’ve fallen and how close we are to the Dow 1929 to 1932 crash. Each bear market is different, and we are fundamentally moving a lot quicker than they did in 1929 to fix the problem.
G – 20
The rookie, Barak Obama, didn’t hit a home run but he certainly was a hit. He translated his world wide star power into results from refereeing a France/China verbal spat to getting a trillion for emerging markets. You can read the NYT editorial the G 20 here More came out of G 20 than almost everyone expected. Obama message – “the world is in this together” – resounded.
This AM (EST) Obama is speaking to an packed audience in France and tying the failure of a mortgage in Florida to the failure of a bank in Iceland.
Israel
My closest Israeli friend absolutely hates the newly elected Netanyahu government. It’s like giving American neocons complete control of Israel. Netanyahu has already told the Obama “Stop Iran or I Will.”
Netanyahu picked an extremist as his foreign minister – a former Moldovan night club bouncer named Avigdor Lieberman, who like Iran’s Ahmadinejad has made some outrageous threat. He immediately “spurned” the peace process started by Bush and supported by Obama/Clinton.
Stimulus & Budget
Although many Republican’s voted against Obama’s stimulus plan the last Republican (South Carolina) holdout governor caved in and will accept the stimulus for his state to keep teachers in the schools and cops on the street.
House and Senate have passed basically the Obama budget.
AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING
Stocks
| Index | Percentage % | Volume |
|---|---|---|
| Dow | +2.79% | up |
| NASDQ | +3.29% | up |
| S&P500 | +2.87% | up |
| Russell2000 | +4.90% | - |
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Technicals & Fundamentals
FASB delivered and stocks gain had a major rally. This time in increased, above average volume. The big volume confirms the move higher and suggest that the rally will continue.
FASB - (Federal Accounting Standards Board) met and significantly changed Mark to Market accounting. The more transparency they strip away from shadow banks the better it will be for short term for stock markets.
Key major index to watch is leading NASDQ - closed at 1602 Taking out both resistance levels at 1587 & 1598. From yesterday – “If especially the later resistance level falls in heavy volume, rally should have more steam in the engine. Anything that threatens shadow banking will hurt stocks.” What the NASDQ needs to do is to consolidate or move higher from these levels.
Rotation – The XLF (the financial ETF) was up a meager 2.8% yesterday. Relatively the financials had doubled and tripled what other major sectors had done on previous rally days. This is a sign of “rotation” in leadership where other sectors take the lead. It is also another strong indication that in the short term the rally will continue.
Baltic Dry (Sea) Index - (see chart link on side of blog)
Since 3/10 the BDI has fallen each day and yesterday was again no exception. Another @-2.3% Total loss from high more than 30%
Bottom Line - If the flow of goods between countries continues to fall, so too will stock markets across the world. Unless we start to see some sort of rebound in the BDI a longer term rally in stocks is dead.
Monthly Unemployment Numbers – Remember as bad as it is it is a lagging indicator. -663,000 for March and unemployment goes from 8.1% to 8.5%. January figures revised up to 741,000 from @ 640,000
Real unemployment rate – includes discouraged workers etc. 15.6%.
Reading the Tea Leaves - The gift of less transparency or the removal of Mark to Market accounting will help the giant over leveraged “Shadow Banks/Institutions” That in addition to all the free money shoveled upon them will, hopefully, get them to make loans to businesses.
Longer term watch the BDI, if it keeps falling so will worldwide stocks. Trade drying up is a sign that protectionism is growing and less money flowing between countries. Like it or not, this is a globalized word and if money stops flowing between countries so will profits & jobs. – Were all in this together..
Long Term Outlook = CAUTIOUSLY BEARISH
See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog
AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!
